by jboullion | Aug 13, 2008 | Uncategorized
From an editorial in the Milwaukee Journal Sentinel:
With all of the praise over the settlement reached this week on We Energies’ Oak Creek power plants, one might be tempted to ask, “What’s wrong with this picture?” Turns out, apparently nothing is. The deal allows We Energies and its two utility partners in the Oak Creek project to finish construction in a timely manner, provides needed help for Lake Michigan and expands renewable energy in Wisconsin.
And while the $105 million settlement will be paid for by electric customers ($100 million) and shareholders ($5 million), the price tag will be far less than it could have been under a protracted legal battle over the plant’s cooling system. We hope that next time the issues can be settled without going to court, but the utilities involved and the environmental groups who fought the plant deserve credit for reaching a compromise that serves everyone.
The issue settled this week was a dispute over the water intake system that We Energies will deploy to draw 1.8 billion gallons of Lake Michigan water per day for cooling at the new power plant. Environmental groups opposed the intake pipe and were demanding that the utility construct more expensive cooling towers.
by jboullion | Aug 11, 2008 | Uncategorized
From the testimony submitted by Michael Vickerman on behalf of RENEW Wisconsin filed with the Public Service Commission on August 11, 2008:
In my testimony I will survey the windpower prospects under development by independent power producers (IPP’s) in the parts of Wisconsin served by WPL. This information will include an estimate of their annual production (in the aggregate) as well as the current permitting and interconnection status for each prospect. The second half of my testimony outlines RENEW’s concerns with WPL’s proposal to co-fire biomass at Nelson Dewey 3 [proposed Cassville plant] . . . .
There are seven IPP-owned wind prospects under development. All range in generating capacity from 50 MW to 100 MW, totaling 609 MW altogether. . . .
RENEW’s reservations about WPL’s stated plans to co-fire biomass at NED3 flow from the specifics of the proposal. RENEW strongly supports using biomass for space and process heating. RENEW also supports generating electricity from dedicated biomass facilities that are considerably smaller than a new baseload facility.
One reservation we have this proposal is the idea of marrying a low-grade biomass fuel to a very expensive new power station with a capacity cost of about $4,000/kW. There are less expensive avenues for acquiring renewable energy, such as windpower, that have lower capital costs and zero fuel costs. There are also less expensive venues for burning biomass for electricity, such as the soon-to-be-retrofitted E. J. Stoneman plant or Xcel’s Bay Front 3 unit. Unlike building a new 300 MW coal plant, retrofitting those power stations to burn biomass fuel won’t require a capital investment in excess of $1 billion. It is a far more efficient use of ratepayer dollars to wed biomass fuel with smaller power stations (<50 MW) than with a larger and very expensive brand-new power plant. With smaller power plants, it is possible to configure them as dedicated biomass generating units. This is not possible with a 300 MW facility.
RENEW’s second reservation is triggered by the configuration of NED3. WPL’s selection of a circulating fluidized bed combustion boiler creates an opportunity to co-fire biomass energy sources at NED3. WPL’s plans, however, call for the biomass fuel to supplement the coal being fed into the boiler, which could easily be fueled with 100% coal. There is nothing about the boiler design that is dedicated specifically to biomass generation. Coal is the mainstay in this configuration, while biomass is simply an opportunity fuel to be used when available. The possibility of being unable to acquire enough biomass fuel for co-firing will not in any way hinder the operation of NED3, because there will always be enough coal on hand to operate the plant at its full rated capacity. Also, because the biomass portion of the plant’s output can vary, depending on how much biomass fuel is available, there is no possible way to predict how many renewable kilowatt-hours will be produced at the plant. Depending on NED’s variable biomass output to help satisfy in-state renewable energy requirements introduces a level of risk that can be avoided by relying on other renewable generation strategies.
Our third reservation stems from WPL’s need to lock up significant supplies of fuel sources of wood and energy at a lower cost than what the same resources would fetch in other markets, especially the biomass thermal market. As a general proposition, burning biomass in an electricity-only facility is a low-value use for a resource that can deliver substantially more energy to an end-user in the form of space and process heat. If biomass is burned at NED3, two-thirds of the energy value of the fuel, be it wood, agricultural residues, or switchgrass, is discharged into the atmosphere. In contrast, a modern wood-fired heating system serving a forest products company can convert 65% of the energy embedded in the fuelwood to useful heat. The higher the conversion factor of a particular energy application, the greater the energy return, which generally translates into a higher economic return. Thermal market participants are well-positioned to pay top dollar for the fuel they use, because they receive an energy return that is double what the same fuel yields when burned in a biomass electric facility. Because NED3 will, if approved, have a low thermal efficiency, WPL would be at a disadvantage if forced to match the prevailing biomass fuel price set by thermal market participants in order to secure upwards of 300,000 tons of biomass a year. . . .
In response to a rebutal of his testimony by one of Alliant’s expert witnesses, Vickerman said:
WPL’s 60 MW biomass initiative is piggybacked on a power plant that, if approved and built, would add four times as much coal-fired capacity estimated to cost more than $4,000/kW.
by jboullion | Aug 11, 2008 | Uncategorized
From a story by Tom Content in the Milwaukee Journal Sentinel:
Fielding calls from folks on Wall Street isn’t in the typical job description for someone working for a conservation group.
Opponents of an Oak Creek power plant reached a deal that will provide money to address environmental issues.
But the calls were about the costliest construction project in state history, the $2.3 billion We Energies power plant being built in Oak Creek.
Jittery stock analysts visited with representatives of Clean Wisconsin in Madison this spring, wanting to know whether its eight-year dispute over the building of a coal-fired generating plant could be resolved.
Those jitters were restraining the company’s stock price and were a key driver behind the settlement reached between We Energies and environmental groups. A deal was reached just hours before utility executives were scheduled to field questions from analysts about the plant’s status.
The settlement ended the last piece of litigation, which was being fought over the power plant’s cooling system. It not only removed hurdles to the plant’s opening, it also meant costly cooling towers wouldn’t have to be built.
Clean Wisconsin and the Sierra Club, in turn, won utility company commitments on a couple of high-profile environmental issues — the Great Lakes and global warming.
Although the deal was in the works for six months, it didn’t get done until utility executives faced their quarterly conference call with investors.
“They were clear they wanted to settle this thing before that analyst call,” said Katie Nekola, energy program director at Clean Wisconsin.
“We wanted to communicate that certainty could be accomplished. That is very true,” said Barry McNulty, We Energies spokesman.
by jboullion | Aug 11, 2008 | Uncategorized
From an article by Kathy Bergstrom in the Business Journal of Milwaukee:
Officials at Quad/Graphics Inc. see efforts to increase energy efficiency and reduce its carbon footprint as an opportunity to be both a better corporate citizen and a better company.
“Being efficient is just being socially responsible, and it’s frankly good business,” said Joe Muehlbach, director of facilities and environmental policy for the Sussex-based commercial printer. “If you’re not conscious of your energy consumption and your emissions, you in fact are probably a struggling business.”
Wisconsin business and environmental leaders said many companies are already taking steps to conserve energy and reduce waste because it makes good business sense. Rising energy prices mean those moves have an even bigger impact on a company’s bottom line.
But some leaders say embracing environmental responsibility at times requires more flexibility when looking at return on investment for an energy or environmental project.
From manufacturers such as Racine-based S.C. Johnson & Son Inc. to retailers such as Kohl’s Department Stores of Menomonee Falls, Wisconsin businesses are taking steps to reduce greenhouse gas emissions and use less energy.
“The really good thing about climate change and business is that almost all the things that are good to address reducing carbon emissions and global warming emissions are also profit making for businesses,” said Steve Hiniker, executive director of 1000 Friends of Wisconsin, an environmental group based in Madison.
Quad/Graphics is one of seven Wisconsin companies listed as participants in the U.S. Environmental Protection Agency’s Climate Leaders program, which had 196 total members as of July 2.
Companies agree to complete a corporate-wide inventory of their greenhouse gas emissions, set long-term reduction goals and annually report their progress to the EPA, according to the agency’s Web site.
The program started in 2002, and the other Wisconsin members are Johnson Controls Inc., Glendale; Kohl’s; MillerCoors, Milwaukee; S.C. Johnson; the former Stora Enso, now NewPage Corp.; and Western States Envelope & Label, Butler.
by jboullion | Aug 8, 2008 | Uncategorized
From an article by Doug Hissom posted on OnMilwaukee.com:
We can each save more than $8,000 a year by taking mass transit says an American Public Transportation Association report. If gas prices stay in the $3.90 a gallon range (unlikely at this point) the association predicts a person can save around $672a month — more than the average household spends on food.
Among the top 20 cities with the highest ridership, Honolulu wins the savings title, amounting to $8,703 a year, Minneapolis riders saved about $8,104 a year by taking the bus and Chicago amounted to $8,100. Milwaukee did not make the list.
The association says its study is based on the assumption that a person making a switch to public transportation would likely purchase an unlimited pass on the local transit agency, typically available on a monthly basis.
by jboullion | Aug 8, 2008 | Uncategorized
BEFORE THE
PUBLIC SERVICE COMMISSION OF WISCONSIN
Application of Wisconsin Power and Light Company
For Authority to Adjust Electric and Natural Gas
Docket No. 6680-UR-116 Rates
DIRECT TESTIMONY OF MICHAEL J. VICKERMAN
ON BEHALF OF RENEW WISCONSIN
Q. What is the purpose of your testimony?
A. The purpose of my testimony is to discuss the company’s proposed solar, wind and biogas energy buyback rates in the context of promoting customer-sited renewable generation facilities. Wisconsin Power & Light (WPL) proposes to acquire wind- and biogas-generated electricity at a price of 9.2 cents/kWh fixed over 10 years and solar electricity at a price of 25 cents/kWh fixed over the same duration.
Q. What are the estimated production costs for biogas and wind energy systems above 20 kW?
A. The data from Focus on Energy-funded wind and biogas energy systems in the past two years give us a clear picture of production costs. For biogas systems up to 500 kW installed this year, the break-even number is now 11 cents/kWh. Between 500 kW and one MW, the system cost drops to 10 cents/kWh. With respect to wind energy installations up to 100 kW, the break-even cost ranges from 18 to 25 cents/kWh range. For a 900 kW wind energy system, the production cost drops to 14 cents per kWh. These estimates are exclusive of federal renewable energy tax credits.
Q. Do you believe that the proposed tariffs will lead to the additional supplies of renewable distributed generation serving WPL?
A. At 9.2 cents, the biogas rate could result in new installations at dairy farms or food processing facilities, but only if the developer succeeds in attracting enough external funding from federal and state sources to cover the difference. Without a U.S.D.A Section 9006 grant or a Focus on Energy incentive in hand, the proposed rate is not likely to amortize a new 500 kW installation over its term.
As for the proposed wind tariff, I am skeptical that it could provide sufficient stimulus for leveraging independently owned installations, even with external funding. The gap between the rate and the system’s production costs is simply too great. It would take either exceptional fundraising talent on the part of the prospective wind turbine owner or a significant disinterest in cash flow to go forward with an installation through the tariff as proposed.
Q. Do you support WPL’s proposed solar electric buyback rate?
A. Yes I do. If approved WPL’s proposed solar tariff will spur additional installations in its territory, which help the utility manage its peak loads more effectively. Certainly that has been the experience with We Energies (WE) and Madison Gas & Electric (MGE). Customer installations of solar electric systems have increased dramatically in both WE and MGE territory since the utilities began offering solar specific rates. WE’s 22.5 cents/kWh rate took effect in January 2006, while MGE’s 25 cents/kWh hit the streets in January this year. The amount of solar electric capacity leveraged by WE’s solar rate is in the neighborhood of 600 kW. At MGE, about 200 kW of solar capacity has been applied for. Relative to other utilities, WE and MGE are attracting a disproportionate share of Wisconsin’s solar electric installations, a phenomenon that can only be explained by their solar buyback rates.
Q. Does the proposed solar tariff fit your definition of an Advanced Renewable Tariff?
A. It does in every way except for the price. Like a true Advanced Renewable Tariff, it is a fixed offering over a specified period of time that does not increase with higher retail rates. The solar tariff is certainly not based on utility avoided costs. However, it is not, by itself, high enough to capture the production costs of a typical photovoltaic installation. According to data gathered from Focus on Energy-funded PV installations, the tariff would have to be at least double that amount in order for the system owner to recoup the investment over a 10-year period. However, that estimate does not factor in the effect of federal tax credits, Focus on Energy incentives, or accelerated depreciation. When those external economic benefits are added on top of WPL’s proposed buyback rate, the overall package starts to approach the break-even point over a 10-year period, especially for larger-scale systems serving for-profit customers.
Q. Is there a need for additional information on WPL’s renewable energy tariffs?
A. Yes. WPL has not indicated whether it will consider money paid to its renewable energy-producing customers as taxable income. With respect to those customer-generators that currently provide electricity to WPL under the utility’s net energy billing tariff, the utility has a policy of disclosing to the Internal Revenue Service any payments made to those customers. Customers who receive a Form 1099-MISC from WPL are legally obligated to include those payments as part of their taxable income. But not all utilities report these payments to the Internal Revenue Service. Those that don’t include WE, MGE, and Wisconsin Public Service (WPS). If WPL intends to send 1099-MISC forms to its renewable energy-producing customers, it should disclose that that information in the tariff language. I can easily imagine the irritation customer-generator would experience when he or she learns that their return on investment is suddenly subject to federal and state taxes. An even better approach would be to discontinue that practice. Judging from the prevailing practice at WE, MGE and WPS, there appears to be no need for WPL to penalize its customer-generators in this fashion.
Q. Does this complete your direct testimony?
A. Yes, it does.
